Harvested Acreages Now the Key Corn Issue

Close to 11% of the U.S. corn crop was harvested prior to Sept. 1, which makes estimating the 2012 difficult.

Drought-driven corn shortage is a world-wide problem this year. "The U.S. is not the only one having trouble," says Joe Glauber, USDA’s chief economist.

USDA’s latest forecast calls for global corn supplies to be down 4.1% in the 2012/13 marketing year, as a major drought has hit a number of key production areas, such as the EU-27 and the Black Sea region. The one major exception is China, the world’s No. 2 corn producer whose output is forecast to be higher in 2012.

Expect stronger corn production in the upcoming cycle from South America. "We’re anticipating better weather (in Argentina and Brazil) than last year," Glauber says. "That part of the balance sheet (for 2013-14) hasn’t yet been planted," however.

It’s possible that U.S. corn production could decline further in the Oct. 11 NASS Crop Production report, Glauber says, because next month’s numbers will reflect changes in harvested acres, which the September report did not.

One challenge for the department this year is to accurately calculate the 2012 crop, in part because harvest began so early. More than 1 billion bushels, close to 11% of the corn crop, was harvested prior to Sept. 1, which is actually in the old crop marketing year.

Questions Surround Soybean, Wheat Production
On soybeans, there are two major questions, Glauber says. One is planting and production in South American with global supplies so tight. The other is what happens to Chinese imports. "We think they will drop off a little bit," Glauber says.

The wheat situation is decidedly different than that for corn and soybeans. U.S. wheat production is forecast to be higher this year, although global output is forecast to be cut more than 5%, as both European and Black Sea production is lower. Small grains were not included in USDA’s September Crop Report; rather the Small Grains Summary will be released Sept. 28.

One reason for the resurgence in U.S. wheat production is because winter wheat was on its way before the drought hit, and spring wheat was less affected by the drought than corn and soybeans, Glauber says. Even though global production is down, the situation is not dire like it was in 2007-08, however, when the world literally ran out of wheat, precipitating food riots in some importing nations. Stocks this year are much higher than back then, Glauber says. "The world had a phenomenal crop in 2011/12."